The UK’s economy will fail to grow at all next year as the cost of living crisis and the impact of the war in Ukraine drives down consumer spending, the OECD warned today.
The Paris based “rich countries’ club” said in its latest economic outlook report that Britain’s GDP will increase by 3.6 per cent this year before flatlining through 2023.
That would put Britain behind the Eurozone and the USA, which are expected to see growth of 1.6 per cent and 1.2 per cent respectively in 2023.
The report also says that UK inflation will peak at over 10 per cent towards the end of this year intensifying the squeeze on households.
Globally inflation is forecast “to reach levels not seen since the 1970s” before starting to ease in 2023.
The 38 member OECD warns that “the UK economy is susceptible to economic spill-over effects from Russia’s invasion into Ukraine through rising energy prices and supply chain disruptions.”
In a gloomy introduction to the report Laurence Boone OECD Chief Economist and Deputy Secretary-General said: “The world is set to pay a hefty price for Russia’s war against Ukraine. A humanitarian crisis is unfolding before our eyes, leaving thousands dead, forcing millions of refugees to flee their homes and threatening an economic recovery that was underway after two years of the pandemic. As Russia and Ukraine are large commodity exporters, the war has sent energy and food prices soaring, making life much harder for many people across the world.
“The extent to which growth will be lower and inflation higher will depend on how the war evolves, but it is clear the poorest will be hit hardest. The price of this war is high and will need to be shared.”